Gen-Z: The Future Market

Born after Millennials, Gen-Z have been irrevocably influenced by their environment, with The Great Recession, climate change, and the increasingly digitised world impacting their behaviour.

Even more so than Millennials, Gen-Z are digitally fluent, having grown up with a vast array of devices at their fingertips. They see smartphones and PC/laptops as equally important when car shopping (Autotrader & Kelley Blue Book) and do not limit themselves with regards to the number of digital devices at their disposal. As a result, Gen-Z expect instant access to content via any device, and they are demanding in their approach: if services are not optimised for seamless multi-channel use, they will move on without further consideration (Business Insider UK).

This behaviour is reflected in their perception and tolerance of advertising. Able to evaluate content much faster than their predecessors, they are harder to reach. On average, Gen Z skip ads 3 seconds faster than Gen X, leaving little time for influence (Research Live; AdReaction). To attract the attention of this demanding and highly visual group, brands must offer interactive, engaging, and immediately beneficial experiences (Fast company; Altitude) both online and offline. Already proven to bring a significant increase in engagement (ZeroLight), these experiences facilitate awareness, consideration, and conversion. But, as brand loyalty diminishes, companies must focus on retention as well as attraction: 81% of Gen-Z concede they would abandon their favourite brand for a similar cheaper product (Retail Perceptions). Personalisation counters this trend, opening the door to meaningful and lasting brand relationships by adding value to both the sales process and the product. Key to this is ensuring prior experiences are made available to potential customers upon their return, satisfying Gen-Z's expectations which are driven by a life-time of social media use (Autotrader & Kelley Blue Book).

A defining trait of this demographic is their perception of money and ownership. The struggles of the Great Recession during their formative years have caused them to be risk averse and keen on saving (Autotrader & Kelley Blue Book; Management Today UK; Goldman Sachs) with a preference for the security of a solid income from a stable employer (CGK; Autotrader & Kelley Blue Book). Their financial shrewdness is such that they constantly look for value, going beyond the price to analyse all aspects of a purchase (Business Insider UK). This, combined with the impact of the recent digital developments across consumer markets, has influenced their views of ownership, such that purchasing copies of books, TV/film, or music is today old-fashioned; cash is fast becoming obsolete, and many are now choosing to rent, rather than buy, expensive clothes (Crowd DNA; Forbes; Ford). A preference for temporary over permanent ownership looks set to permeate all aspects of Gen-Z's lives, and the rapid growth of services like Uber and Zipcar could disrupt their propensity for car ownership (Crowd DNA; Ford).

Despite the explosion of this ‘subscription economy', a mammoth 92% of Gen-Z intend to own a car (Autotrader & Kelley Blue Book). The type of car, however, is set to change. Growing up with climate change as an irrefutable fact, this environmentally conscious group desires eco-friendly cars far more than previous generations: 27% of Autotrader & Kelley Blue Book's 3,000 Gen-Z respondents confirmed this was the most important factor to them. Cost, however, remains the principle concern across the cohort (top for 77% vs 72% of Millennials) at the expense of style (49% vs 57% for Millennials) and brand (23% vs 34% for Millennials). Safety was also a key issue, with autonomous vehicles the proposed solution. 47% want most cars to self-drive in the next 10 years, with 61% believing that this would improve road safety (Autotrader & Kelley Blue Book). Above all, though, Gen-Z seek car innovation (Crowd DNA), and they will not choose to be lumbered with outdated products if there is a viable alternative to traditional purchasing which affords them with continual access to the latest developments. Companies must be wary of this "emerging ‘a la cart' mentality that trumpets access over ownership" (Ford) and places customers, not products, at the heart of the relationship (Forbes).

That being said, traditional dealerships still hold sway with this generation. Gen-Z value face-to-face experiences more than their forebears (Autotrader & Kelley Blue Book), but the purpose behind their interactions has shifted. Sophisticated online researchers (CGK), Gen-Z come to the dealership armed with detailed information to see whether a car meets their preconceived expectations. As such, they view dealership visits as a means of validation over discovery, and their interactions with salespeople are less sales orientated. While this emphasizes the increased significance of the OEM's online presence, it also points to the importance of the dealership fully adopting its new role as an "experience centre" (Autotrader & Kelley Blue Book). Dealerships should bear in mind that Gen-Z value a positive experience above all else when shopping and adapt their approach to suit these well-informed customers' needs.

Gen-Z present a unique prospect to the automotive industry. Their views on money, ownership, and the environment set them apart from their predecessors, but their affinity with tech and revived desire for face-to-face experiences are a real chance for brands hoping to gain their favour. Above all else, innovation and personalisation are key to engaging this cohort.